This paper argues that the observed misconduct of managers and gatekeepers in the recent corporate scandals is better explained if one accounts for the time-inconsistent preferences of corporate actors. It builds on of my model of time-inconsistent misconduct, which I develop more fully...

We analyze how public debt evolves when successive policymakers have different policy goals and cannot make credible commitments about their future policies. We consider several cases to be able to disentangle and quantify the respective effects of imperfect commitment and political...

We study information processing in a simple endowment economy where the mean consumption growth rate are governed by a hidden state variable and agents have recursive preferences. We show that for typical parameter values, there is a strong incentive to commit to ignoring future information on...

Model uncertainty has the potential to change importantly how monetary policy should be conducted, making it an issue that central banks cannot ignore. In this paper, I use a standard new Keynesian business cycle model to analyze the behavior of a central bank that conducts policy with...

We establish the precise connections between progressive taxation and inequality reduction, in a setting where the level of tax revenue to be raised is endogenously fixed and tax schemes are balanced. We show that, in contrast with the traditional literature on taxation, the equivalence between...

Goals are an important source of motivation. But little is known about why and how people set them. We address these questions in a model based on two stylized facts from psychology and behavioral economics: i) Goals serve as reference points for performance. ii) Present-biased preferences...

We consider an exchange economy with time-inconsistent consumers whose preferences are additively separable. When these consumers trade in a sequence of markets, their time-inconsistency may introduce a non-convexity that gives them an incentive to trade lotteries. If there are many consumers,...

This paper verifies the performance of the Barro and Gordon (1983) model to explain the US inflation since the early 1950's. We divide the period from 1951:2 to 2005:2 according to each chairman of the Federal Reserve (FED). In addition, we consider aggregated periods, represented by pre-,...